TIDMPGR
RNS Number : 7336B
Phoenix Global Resources PLC
11 June 2019
11 June 2019
Phoenix Global Resources plc
("Phoenix" or the "company")
Q1 2019 Operational Update
Phoenix Global Resources plc (AIM: PGR; BCBA: PGR), the upstream
oil and gas company offering its investors direct exposure to
Argentina's Vaca Muerta shale formation and other unconventional
resources, is pleased to announce its operational update for the
first quarter of 2019.
Operational highlights
-- Successfully concluded drilling of second horizonal appraisal
well at Mata Mora
-- Both Mata Mora wells were unconventionally completed during
May 2019 in a simultaneous completion operation that applied
80 frac stages across the two wells
-- Granted unconventional concession with 35-year term covering
the whole of the Puesto Rojas block in Mendoza province,
the first concession of its kind in the province
-- Average daily working interest production of 9,636 boe (Q4
2018: 9,885 boe)
Financial performance (unaudited)
-- Amended convertible RCF increased by US$40.0 million to
fund ongoing appraisal and development activity at Mata
Mora and Puesto Rojas
-- Q1 2019 revenue of US$32.1 million (Q4 2018: US$40.9 million)
-- Average realised prices Q1 2019 of US$41.81/ boe (Q4 2018:
US$46.27/boe before hedging)
Outlook
-- Flowback of both Mata Mora appraisal wells to commence mid-June
2019 with results expected during Q3 2019
-- Up to eight additional unconventional wells planned at the
Puesto Rojas area in 2019 as part of the initial development
of the folded Agrio formation
Javier Vallesi, COO said:
"The safe completion of our first two horizontal wells at Mata
Mora is a significant technical and operational step forward for
the company. These wells are important to appraise the potential of
the Vaca Muerta formation in this key block. The wells were drilled
and completed in accordance with the planned well design and both
wells will shortly be placed on flowback. We expect to be able to
update the market on the result of these wells and their impact on
the Mata Mora development plan in early Q3 2019.
We have also been granted an unconventional concession for the
Puesto Rojas block in Mendoza. The concession is the first of its
kind to be granted in the province and carries a 35-year term. The
award of the unconventional concession paves the way for us to move
forward in the continued appraisal of the various unconventional
opportunities present in the block and, ultimately, to development
and production of unconventional oil and gas in this key
concession."
For further information, please contact:
Phoenix Global Resources Kevin Dennehy, CFO T: +54 11 5258 7500
plc
Stockdale Securities Antonio Bossi T: +44 20 7601 6100
David Coaten
Panmure Gordon Charles Lesser T: +44 20 7886 2500
Camarco Billy Clegg T: +44 20 3757 4980
Owen Roberts
James Crothers
About Phoenix
Phoenix Global Resources is an independent oil and gas
exploration and production company focused on Argentina and listed
on the London Stock Exchange (AIM: PGR) and Buenos Aires Stock
Exchange (BCBA: PGR). The Company has over 1.8 million licenced
working interest acres in Argentina (of which over 0.7 million are
operated), 57.1 million boe of working interest 2P reserves and
average working interest production of approximately 10,249 boepd
in 2018. Phoenix has signi cant exposure to the unconventional
opportunity in Argentina through its approximately 700,000 working
interest acres with Vaca Muerta and other unconventional
potential.
The Company's website is www.phoenixglobalresources.com
Licences and business development
In April 2019 the Province of Mendoza granted the company an
unconventional concession for the entirety of the Puesto Rojas
block
The concession carries a primary term of 35 years with provision
for extensions thereafter. The concession includes an initial pilot
phase with certain works to be completed by June 2022. On
conclusion of the pilot phase the company has the option to move
into unconventional development or to terminate the unconventional
concession without penalty and resume the conventional development
of the block.
Drilling and completions activity
Mata Mora
The primary operational focus in 2019 to date has been on the
drilling and completion of the company's first two horizontal
wells, the objective of which is to appraise the development
potential of the Vaca Muerta formation at Mata Mora.
A two-well pad was started in September with the drilling of the
first horizontal well, MMx.1001. The second horizontal well,
MMx.1002, was spudded in late January and reached a total depth of
5,370 metres before being cased and cemented. The horizontal
section was drilled with a total cased lateral length of 2,058
metres. As with MMx.1001, 90% of the lateral section of the second
well was successfully drilled within a seven-metre window in the
Vaca Muerta formation with a significant portion remaining within a
narrower three-metre window.
Both wells were completed in a simultaneous zipper-frac
operation that was completed in late May with 80 frac stages
successfully completed across the two wells.
The flowback stage that recovers the frac water from the wells
is due to commence in mid-June with initial oil production expected
after approximately 45 days of flowback. Approximately 20 days
following this flowback period, the oil production rates are
expected to increase to levels that are sufficient to estimate IP
rates for the wells.
Puesto Rojas Area
The CDM 3012 well was completed and placed on pump in Q1 2019;
this is the final well from the 2018/19 completions campaign that
is aimed at appraising Puesto Rojas for large scale unconventional
development. The completions campaign across eight wells in total
included both full and limited tests of the potentially productive
horizons present on the block in order to define a development plan
and sequence for the development of the various unconventional
opportunities present in the area. In addition, the previously
drilled CDM-3004 well was completed in April 2019 and also placed
on flowback.
As a result of the work done in the completions campaign, the
relatively shallow folded Agrio formation has been selected as the
first unconventional development programme for the area. The
development of the folded Agrio has relatively lower risk and cost
profile whilst still being expected to yield high initial
production and promising project economics. The initial development
is due to commence in 2H 2019 with up to seven unconventional
vertical wells currently planned.
It is expected that development of the Vaca Muerta at Puesto
Rojas will follow the development of the folded Agrio and the
appraisal and development work planned at the Mata Mora and
Corralera concessions.
Partner operated activity
YPF - Chachahuen and El Manzano Oeste
The main partner-operated drilling activity was undertaken by
YPF at the Cerro Morado Este concession that forms part of the
Chachahuen asset. A total of nine wells were drilled on the
concession with seven wells in Cerro Morado Este and two in
Chachahuen Sur. The initial work performed at Cerro Morado Este in
the period was part of the activity to delineate the block and to
identify the most potentially productive areas for development.
The lower level of drilling at Chachahuen Sur reflects the move
of the development focus to Cerro Morado Este as Chachahuen Sur has
been largely drilled out. The operational focus at Chachahuen Sur
is now on enhanced recovery through waterflood with limited
additional production drilling.
In addition, a limited number of exploration wells were drilled
at the YPF-operated portion of the El Manzano Oeste (Resto)
concession. Completion of these wells started at the end of Q1 2019
and the results from the wells are expected toward the end of
Q2.
Other partner operated activity
Chañares Herrados
In May, the company was notified that the Province of Mendoza
had issued a decree terminating the extension to the exploitation
licence for the Chañares Herrados block that had previously been
granted to Chañares Energía S.A. The notification was given as a
result of non-compliance by Chañares Energía S.A. in relation to
commitments under the concession.
The company holds an interest in some existing wells in the
block through a joint venture agreement in place with Chañares
Energía S.A., which establishes that the latter is the only license
holder of the block
Chañares Energía S.A. has informed the company that it will take
legal actions with the aim of reversing the termination of the
license and continue with the exploitation of the block.
Chañares Herrados block currently produces 500 boepd and has 2P
reserves of 2.3 million boe, both net to the company's interest
Q1 2019 production
Average total daily production volumes in Q1 2019 compared to
full year 2018 and the previous two quarters were as follows:
Production (boepd)
FY 2018 Q1 2019 Q4 2018 Q3 2018
-------- -------- --------
10,256 9,636 9,885 9,946*
-------- -------- --------
*adjusted for volumes under-reported by Chañares Herrados
operator in Q3 2018
Total average daily production in Q1 2019 was 9,636 boepd.
Neuquina basin
Production (boepd)
FY 2018 Q1 2019 Q4 2018 Q3 2018
-------- -------- --------
4,471 3,985 4,112 4,157
-------- -------- --------
Neuquina basin production was down for the quarter mainly due to
natural decline on existing assets not yet offset by new
production.
Puesto Rojas Area
Production (boepd)
FY 2018 Q1 2019 Q4 2018 Q3 2018
-------- -------- --------
1,822 1,583 1,668 1,649
-------- -------- --------
Operator: PGR
In Q1, workovers were performed on five wells as part of the
unconventional appraisal programme at Puesto Rojas. The CDM 3001
and 3007 wells were recompleted from the Chachao and Vaca Muerta
formations with peak rates of 20 bopd from CDM 3001 as part of a
limited test and 115 bopd from CDM 3007. The peak rate on CDM 3007
is increased from the 98 bopd level previously reported.
The CDM 3012 well similarly saw production gains following
installation of a pump with production increasing from the
previously reported 88 bopd to 113 bopd.
The CDM 3023 well was recompleted in the Vaca Muerta and the
Agrio formations in January 2019 achieving a peak rate of 123 bopd
from the Vaca Muerta formation using a rod pump and at a peak rate
of 356 bopd in the Agrio formation that flowed naturally up the
annulus.
The PR 53 well was similarly recompleted in the Agrio formation
and achieved a peak rate of 74 bopd.
Chachahuen Sur and Cerro Morado Este
Production (boepd)
FY 2018 Q1 2019 Q4 2018 Q3 2018
-------- -------- --------
2,348 2,249 2,276 2,311
-------- -------- --------
Operator YPF
Production at Chachahuen Sur was slightly down in Q1 2019 as the
development focus shifts towards delineation activity at Cerro
Morado Este aimed at determining the areas within the concession
that have the most production potential.
During the quarter, YPF drilled nine new wells most of which
were part of the delineation work at the Cerro Morado Este
concession and related to the delineation program for this
block.
Austral basin
Production (boepd)
FY 2018 Q1 2019 Q4 2018 Q3 2018
-------- -------- --------
3,960 3,787 4,033 3,902
-------- -------- --------
Production was down in the Austral basin with minor increases
realised from the Tierra del Fuego assets not offsetting decline
and unplanned downtime events at the Santa Cruz Sur assets.
Santa Cruz Sur
Production (boepd)
FY 2018 Q1 2019 Q4 2018 Q3 2018
-------- -------- --------
3,024 2,648 2,896 2,966
-------- -------- --------
Operator: ROCH S.A.
Production decreases at Santa Cruz Sur were driven largely by
natural decline and several unplanned downtime events affecting
multiple wells at Cerro Norte. In the quarter, four minor pulling
jobs for well repairs were performed with no other significant
activity undertaken.
Tierra del Fuego
Production (boepd)
FY 2018 Q1 2019 Q4 2018 Q3 2018
-------- -------- --------
936 1,138 1,137 936
-------- -------- --------
Operator: ROCH S.A.
Production increases in Tierra del Fuego were largely driven by
continued improvements in production performance in the SM.x-1001,
with minor incremental production from the SM.a-1003 well that came
online in March. This served to offset production decline on other
wells. During the quarter three minor pulling jobs were
performed.
The continued development plans for both Santa Cruz Sur and
Tierra del Fuego remain under discussion between Phoenix and the
asset operator, ROCH S.A.
Additional information
Production summary
WI FY 2018 Q1 2019 Q4 2018 Q3 2018
% Net BOE/D Net BOE/D Net BOE/D Net BOE/D
-------------------------- ----- ---------- ---------- ---------- ----------
AUSTRAL 3,960 3,787 4,033 3,902
Angostura (CA-14) 13% 352 564 529 383
Campo Breman 70% 538 484 504 539
Chorillos 70% 1,999 1,705 1,944 1,959
Las Violetas 13% 563 560 586 532
Moy Aike 70% 98 89 88 78
Oceano 70% 389 370 359 390
Rio Cullen 13% 22 14 22 22
-------------------------- ----- ---------- ---------- ---------- ----------
CUYANA 1,818 1,864 1,734 1,883
Atamisqui 100% 318 315 319 316
Chañares Herrados
(JV wells only) 78% 499 546 457 578
Refugio Tupungato 100% 1,002 1,003 959 989
-------------------------- ----- ---------- ---------- ---------- ----------
GOLFO SAN JORGE 6 4 7 4
Sur Rio Deseado Este 25% 6 4 7 4
-------------------------- ----- ---------- ---------- ---------- ----------
NEUQUINA 4,471 3,985 4,112 4,157
Cajon de los Caballos 38% 121 108 120 125
Cerro Mollar Norte 100% 91 90 95 83
Cerro Mollar Oeste 100% 88 72 86 88
Cerro Morado Este 20% - 15 - -
Chachahuen Sur 20% 2,298 2,188 2,226 2,257
Chachahuen Sur (Permiso) 20% 50 46 50 53
El Manzano Oeste (Agrio) 100% 11 - - -
El Manzano Oeste (Resto) 40% 16 14 15 19
La Brea 100% 37 31 33 54
La Paloma 100% 1 - - -
Mina Cerro del Alquitran 100% - - - -
Puesto Rojas 100% 1,744 1,421 1,487 1,477
Rio Atuel 67% - - - -
Vega Grande 100% 12 - - -
-------------------------- ----- ---------- ---------- ---------- ----------
GRAND TOTAL 10,256 9,636 9,885 9,946
-------------------------- ----- ---------- ---------- ---------- ----------
All production figures in the tables and the text of this
announcement are net figures for the company's interest in the
various licences. Totals may not add due to rounding.
- Ends -
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END
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